Which is better to invest in real estate or stocks?
Read this valuable review by DC Fawcett
Introduction
Real estate is the land and the buildings on it and also includes natural properties like crops and minerals. Stock is a type of security in a firm which lays a claim on the profits and assets of the firm. Both real estate and stocks are good for investing. Real estate investment has earned an average return of 8.6% from 1978-2004, while stock earned 10.6575%. So how do we decide which is better for investing? While we can see that stock has earned a higher return on an average, real estate is a tangible asset. So we must first analyze the pros and cons of both to decide which is one step ahead for investing? We can do this easily by reading DC Fawcett reviews
Real Estate:
People can relate to real estate easily as it is an appreciable and tangible asset. There are two main types of real estate: commercial and residential. Investing in real estate is not easy as it is not monotonous. A thorough analysis of the pros and cons of investing in various types of real estate must be done (A separate topic of discussion by itself) before deciding how we are going to make money out of real estate.
Pros and Cons of real estate investments
Pros of real estate investments
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It results in tax deductions
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It is an appreciable asset – prices have appreciated to nearly 20% in the United States from the year 2012-2015
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If we sell a property and invest in a similar one , we are not liable to any tax;
Cons of real estate investments
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For real estate to appreciate it takes time and we cannot sell it easily.
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Real estate prices either increase at a slow rate or stay flat – housing prices rose by 6% in 2015 and they are predicted to rise by 3% in 2016 as surveyed.
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The closing cost can be a lot in terms of commission and taxes
Pros and cons of stocks
Pros of stocks
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Stocks are easy to sell. Stocks often do better than real estate in a year .
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Stocks can be reallocated even into a retirement account
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Stocks tend to increase a company’s growth.
Cons of stocks
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Stocks are very unstable and depend heavily on economic situations. When the economy is bad stocks do really poor.
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Sometimes decisions related to stocks can be illogical within the market.
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We are always in the danger of our stocks getting dissolved due to bankruptcy
Conclusion
Stocks have a real edge in some areas but real estate is better in terms of stability and taxes. Also some disadvantages of real estate can be nullified- for example when we invest in real estate, diversification is not possible but when we invest in real estate investment trusts then it is possible to overcome this disadvantage. On the whole your financial position and comfort determine the type of investment area.